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Doctors' Best Medical Cost-Cutting Ideas: Tort Reform, Tort Reform And Tort Reform
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2008 record      


Nearly half of doctors say tort reform is key to getting U.S. health care costs under control, according to the IBD/TIPP Poll on which this series is based.

Of the 1,376 doctors who responded to our survey, 48% mentioned tort reform as the best way to slow the rise in medical costs. The No. 2 preferred cost-cutting measure was "insurance reform," at 18%, followed by reform of pharmaceuticals, at 6%.

Other major suggestions, in diminishing order of their mention, include stopping the use of defensive medicine, allowing consumers to buy insurance across state lines, more preventive care, more focus on healthy lifestyle choices, reducing waste and fraud, and more patient responsibility for the costs of their treatment.

The survey was mailed Aug. 28 to 25,600 physicians nationwide and 5.4% responded by our Sept. 15 cutoff date. That is considered a high rate of return, considering how difficult doctors are to get hold of.

One of the two open-ended questions asked was: "If it is true health care is growing too expensive, what key thing do you think should be done to slow increasing medical costs?"

Responses fell into 23 different categories, but tort reform was king. This was especially true among those who oppose the proposed health care reforms that have emerged from Congress. In that group, 61% believe that tort reform is essential.

But even among those who support government-run care, 25% believe tort reform will be needed.

"Tort reform on a national scale is a must," as one doctor put it, echoing the sentiment of literally dozens of others in our poll.

Doctors often complain that medical malpractice insurance, at $100,000 to $250,000 a year, is too burdensome and forces many doctors out of private practice.

Health care analysts say that the number of unnecessary tests and procedures - so-called "defensive medicine" - has surged as doctors' fear of lawsuits has grown.

"Tort reform," said one of our physician respondents, "would lessen the costs incurred by defensive medicine and would encourage volunteerism at home rather than abroad."

Along the same lines, one doctor suggested that tort reform would make it "so physicians don't have to do so many useless tests and diagnostics procedures."

Another said Americans have become sue-happy, going to court any time they don't like a result. As such, that doctor said, any future plan should both "protect doctors from liability" and "change Americans' thinking that bad results are equal to malpractice."

The physicians may be on to something. Doctors and economists point to recent experiments in tort reform at the state level that have helped cut physicians' costs.

President Obama recently suggested a "demonstration project" to see if tort reform would work. Some states, however, have already started without him.

In Texas, tort reforms that began in 2003 capped non-economic damages at $250,000 per defendant and $750,000 per incident. No cap was placed on such things as lost income or medical costs.

The result: Doctors in the Lone Star State have seen malpractice insurance rates fall 37%, while 10 new insurers have entered the market. Some 15,000 new doctors have applied to practice in Texas, a 57% increase.

Mississippi, more than once referred to as a liability "hellhole," likewise passed a broad tort reform in 2004, covering both business and medicine. Malpractice claims there have plunged 91% from their peak, as doctors' malpractice insurance costs have decreased up to 45%.

Missouri, too, has implemented liability reforms. Former Gov. Matt Blunt recently noted that reforms there in the last four years have pushed malpractice claims to a 30-year low, cutting premiums and attracting more doctors to the state.

A recent estimate puts medical liability costs at about $60 billion a year. Critics note that's only 3% of total health care spending.

Problem is, that's only direct costs from medical liability. Because they fear being hit by million-dollar lawsuits, doctors are more likely to practice defensively - ordering unnecessary tests and performing unneeded procedures just to cover themselves. This can be highly expensive and corrosive to the health care system.

Peter Orszag, former head of the Congressional Budget Office, estimated in 2008 that as much as $700 billion each year - about 5% of our GDP and 30% of all health care costs - is spent on tests and procedures that do nothing to improve Americans' health.

As for insurance reform, doctors make two major points repeatedly: Insurers take too much of the health care dollar, and exercise too much control over treatments.

But the way our health care system is designed, only two entities exercise real control over what is spent: insurance companies and government.

Through Medicare and other programs, government today makes up an estimated 47% of all health care expenditures. Using its enormous market clout as a monopoly, it "negotiates" reductions of up to 20% in doctors' fees and 30% in hospital fees - leaving private insurers to pick up the rest.

This has led to soaring private health care premiums, a major complaint of businesses and individuals alike. A recent study for the National Bureau of Economic Research found that a $1,000 rise in health insurance premiums led to a nearly 3% decline in the number of uninsured.

Still, doctors are scathing in their assessment of insurers. One gave only one suggestion for health care cost cuts: "Slow down profits to the insurance companies." Others merely said "control insurance cost" or "redirect money made by insurance companies." Still others blamed insurance CEOs.

High on the complaint list was the mounds of paperwork required for both insurers and the government - and what was seen as enormous administrative waste.

"Insurance companies and middlemen take up 20% of (doctors') revenue," complained one of our respondents.

Insurers, however, are mostly limited at the state level to a profit margin of 5% or less. And total after-tax industry profits of an estimated $32 billion don't account for excess medical costs.

Even so, doctors criticize the nation's 1,300 insurers for lacking in competition. Some suggested letting customers in one state buy insurance from companies in others - a practice not widely permitted now.

A number of respondents suggested that reducing the involvement of insurers and increasing the involvement of patients in paying for their care would be a good thing.

"Get rid of the middleman (insurance industry)," said one doctor. "Have every patient pay for his/her medical expenses through medical savings accounts. Prices will go down."

Drugs, too, come in for a drubbing by the doctors. "(The) pharmaceutical industry should be controlled so we pay the same as other countries," said one.

But there was also a recognition by physicians that drugs, while expensive, lengthen people's lives - and a concern that if government becomes more deeply involved, innovation and technology will slow.

Friday: Both the doctors who support the government's plan and those who don't tell us why - in their own words.

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